HOUSTON, Jan. 31, 2018 (GLOBE NEWSWIRE) -- CBTX, Inc. (the “Company”) (NASDAQ:CBTX), the bank holding company for CommunityBank of Texas N.A., today announced net income of $2.0 million, or $0.08 per diluted share, for the quarter ended December 31, 2017, compared to $7.6 million, or $0.34 per diluted share, for the quarter ended December 31, 2016 and $10.0 million, or $0.45 per diluted share, for the quarter ended September 30, 2017.

The Company reported net income for the year ended December 31, 2017 of $27.6 million, or $1.22 per diluted share, compared to $27.2 million, or $1.22 per diluted share, for the year ended December 31, 2016.

Highlights

• Net income for the fourth quarter of 2017 included a charge of $3.9 million related to the Tax Cuts and Jobs Act (the "Tax Act") and change of control expenses of $2.5 million ($1.6 million after tax), triggered by our initial public offering.
  
  
• Loan growth, excluding loans held for sale, was 20.2% for the quarter (annualized) and 7.3% for the year.
  
  
• The Company completed its previously announced initial public offering of 2,760,000 shares of its common stock to the public at $26.00 per share for gross proceeds of approximately $71.8 million. Our common stock began trading on the NASDAQ Global Market on November 8, under the ticker symbol "CBTX."

CBTX, Inc. Chairman and Chief Executive Officer Robert R. Franklin Jr. commented, “2017 was an outstanding year for our Company. We reported total assets of $3.1 billion, total loans of $2.3 billion, total deposits of $2.6 billion and net income of $27.6 million, each of which are all-time highs for our Company.”

Operating Results:

Net Interest Income

Net interest income was $28.2 million for the fourth quarter of 2017, compared to $25.8 million for the fourth quarter of 2016 and $27.3 million for the third quarter of 2017. The increase in net interest income in the fourth quarter of 2017 from the fourth quarter of 2016, was due to increased average loans and securities and increased average yields on federal funds sold and other interest-earning assets. The increase in net interest income in the fourth quarter of 2017 from the third quarter of 2017 was due to increased average loans and federal funds sold and other interest-earning assets and the impact of the November repayment of our note payable in the amount of $23.3 million. Net interest income was $107.8 million for the year ended December 31, 2017, compared to $101.5 million for year ended December 31, 2016. The increase in net interest income in 2017, as compared to 2016 was due to increased average loans and securities and increased average yields on federal funds sold and other interest-earning assets.

The average balance of total interest-earning assets was $2.8 billion for the quarter ended December 31, 2017, an increase of $99.1 million, compared to the average balance for the quarter ended December 31, 2016 and $94.3 million, compared to the average balance for the quarter ended September 30, 2017. The increase in the average interest-earnings assets for the quarter ended December 31, 2017, compared to the quarter ended September 30, 2017 is primarily due to increases in average loans and federal funds sold. The increase in the average interest-earnings assets for the quarter ended December 31, 2017, compared to the quarter ended December 31, 2016, is primarily due to increases in average loans and average securities. The average balance of interest-earning assets was $2.7 billion for the year ended December 31, 2017, an increase of $88.8 million, compared to the average for the year ended December 31, 2016. The increase in average interest-earning assets for the year ended December 31, 2017, compared to the year ended December 31, 2016 is primarily due to increases in average loans and average securities, partially offset by a decrease in average federal funds sold. 

The yield on interest-earning assets was 4.29% for the fourth quarter of 2017, compared to 4.11% for the fourth quarter of 2016 and 4.32% for the third quarter of 2017. The yield on interest-earning assets was 4.30% for the year ended December 31, 2017, compared to 4.19% for the year ended December 31, 2016. The increase from the prior year is primarily due to an increase in the yield on investments and federal funds sold.

The cost of interest-bearing liabilities, including borrowings, was 0.56% for the fourth quarter of 2017, compared to 0.57% for the fourth quarter of 2016 and 0.60% for the third quarter of 2017. The cost of interest-bearing liabilities, including borrowings, was 0.58% for the year ended December 31, 2017 compared to 0.56% for the year ended December 31, 2016.

The net interest margin was 3.98% for the fourth quarter of 2017 compared to 3.78% for the fourth quarter of 2016 and 3.98% for the third quarter of 2017. The net interest margin was 3.97% for the year ended December 31, 2017 compared to 3.87% for the year ended December 31, 2016.

Provision (Recapture) for Loan Losses

Provision for loan loss was $1.1 million for the fourth quarter of 2017, compared to a provision for the fourth quarter of 2016 of $650,000 and a recapture of $1.7 million for the third quarter of 2017. The recapture in the third quarter of 2017 is primarily the result of pay-offs of certain classified and problem loans, which resulted in a decrease in their related allowance for loan losses. Provision for loan loss was a recapture of $338,000 for the year ended December 31, 2017, compared to a provision of $4.6 million for the year ended December 31, 2016. The recapture in the year ended December 31, 2017 was primarily the result of pay-offs of certain classified and problem loans, which resulted in a decrease in their related allowance for loan losses.

The allowance for loan losses was $24.8 million, or 1.07% of total loans, at December 31, 2017, compared to $25.0 million, or 1.16% of total loans, at December 31, 2016 and $23.8 million, or 1.08% of total loans, at September 30, 2017. The lower balance at September 30, 2017 is primarily the result of the recaptures mentioned above.

Noninterest Income

Noninterest income was $3.1 million for the fourth quarter of 2017, $4.4 million for the fourth quarter of 2016 and $4.1 million for the third quarter of 2017. These fluctuations are primarily due to net gains recorded on sales of assets recorded in the third quarter of 2017 and the fourth quarter of 2016 resulting from sales of branches in those periods. Noninterest income was $14.2 million for the year ended December 31, 2017 and $15.7 million for the year ended December 31, 2016, a decrease of $1.5 million, or 9.8%. This decrease primarily resulted from a decrease in deposit account service charges due to a reduction of non-sufficient and overdraft charges incurred by our deposit customers and a decrease in other income due to income from our SBIC investment in 2016.

Noninterest Expense

Noninterest expense increased $3.3 million during the fourth quarter of 2017, as compared to the fourth quarter of 2016 and increased $3.0 million, as compared to the third quarter of 2017. The increase in noninterest expense compared to the fourth quarter of 2016 and the third quarter of 2017 is due primarily to a $2.5 million charge for change of control payments to certain employees triggered by our initial public offering, which is reflected in salaries and employee benefits and increased professional and director fees. Noninterest expense increased $4.8 million during 2017, as compared to 2016 due to the change of control payments previously mentioned, increased professional and director fees and increased advertising due to our branding campaign in 2017, partially offset by decreased occupancy costs due to sales of branches in 2016 and 2017.

Income Taxes

Income tax expense was $6.3 million for the fourth quarter of 2017, $3.3 million for the fourth quarter of 2016 and $3.9 million for the third quarter of 2017. During the fourth quarter of 2017, we recorded a deferred tax asset impairment of $3.9 million related to the recent Tax Cuts and Jobs Act. Income tax expense was $16.5 million for the year ended December 31, 2017 and $12.0 million for the year ended December 31, 2016, an increase of $4.5 million, due to deferred tax asset impairment previously mentioned above and true-ups and return to provision adjustments booked in 2017.

As a result of the Tax Act passed in December 2017, the Company was required to recalculate its deferred tax assets and deferred tax liabilities to account for the future impact of lower corporate tax rates and lost deductions on these assets and liabilities. The effective tax rate for the fourth quarter of 2017 including the impact of the Tax Act was 76.3% and would have been approximately 29.7% without the impact of the Tax Act. The effective tax rate for 2017 including the impact of the Tax Act was 37.4% and would have been approximately 28.6% without the impact of the Tax Act. The effective tax rates were 30.5% for the fourth quarter of 2016, 28.1% for the third quarter of 2017 and 30.7% for 2016.

Balance Sheet Highlights:

Loans

Loans were $2.3 billion at December 31, 2017, $2.1 billion at December 31, 2016 and $2.2 billion at September 30, 2017.  The increases from the prior year and linked quarter are primarily due to organic growth.

Asset Quality

Nonperforming assets were $8.4 million, or 0.27% of total assets, at December 31, 2017, $8.1 million, or 0.27% of total assets, at December 31, 2016 and $9.7 million, or 0.33% of total assets at September 30, 2017.

Nonperforming loans were $7.6 million, or 0.33% of total loans, at December 31, 2017, $6.2 million, or 0.29% of total loans, at December 31, 2016 and $8.6 million, or 0.39% of total loans, at September 30, 2017.

Annualized net charge-offs (recoveries) to average loans were 0.00% for the fourth quarter of 2017 and 0.50% for the fourth quarter of 2016 and (0.04)% for the third quarter of 2017. The recoveries in the third quarter of 2017 are primarily the result of payoffs of certain classified and problem loans.

Deposits and Borrowings

Total deposits were $2.6 billion at December 31, 2017, compared to $2.5 billion at December 31, 2016 and $2.6 billion at September 30, 2017. The increase from the prior year is primarily due to organic growth.

Total borrowings (excluding junior subordinated debentures) were $1.5 million at December 31, 2017, $30.0 million at December 31, 2016 and $26.6 million at September 30, 2017. The decrease in borrowings at December 31, 2017 is due to scheduled payments and our fourth quarter repayment in full of the outstanding balance of our note payable.

On December 13, 2017, we entered into a loan agreement providing for a $30 million revolving line of credit and from that date through December 31, 2017, we made no borrowings under that agreement.

Capital

At December 31, 2017, we were well capitalized under regulatory guidelines. At December 31, 2017, our ratio of total shareholders’ equity to total assets was 14.48% and our tangible equity to total tangible assets was 11.98%. At December 31, 2016, our ratio of total shareholders’ equity to total assets was 12.12% and our tangible equity to total tangible assets was 9.39%. Tangible equity to total tangible assets is a non‑GAAP financial measure. See the table captioned “Non‑GAAP to GAAP Reconciliation.”

In November 2017, we completed our initial public offering of our common stock issuing 2,760,000 common shares at $26.00 per share and net proceeds of $64.5 million, which is the primary cause of the increase in these ratios.

About CBTX, Inc.

CBTX, Inc. is the bank holding company for CommunityBank of Texas, N.A., a $3.1 billion asset bank, offering commercial banking solutions to local small and mid-sized businesses and professionals in Houston, Beaumont and surrounding communities in southeast Texas.  Visit www.communitybankoftx.com for more information.

Forward-Looking Statements

This release may contain certain forward-looking statements within the meaning of the securities laws that are based on various facts and derived utilizing important assumptions, current expectations, estimates and projections about the Company and its subsidiary. Forward-looking statements include information regarding the Company’s future financial performance, business and growth strategy, projected plans and objectives, as well as projections of macroeconomic and industry trends, which are inherently unreliable due to the multiple factors that impact economic trends, and any such variations may be material. Statements preceded by, followed by or that otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may” and “could” are generally forward-looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Further, certain factors that could affect our future results and cause actual results to differ materially from those expressed in the forward-looking statements include, but are not limited to whether the Company can: prudently manage and execute its growth strategy; manage risks associated with its acquisition and de novo branching strategy; maintain its asset quality; address the volatility and direction of market interest rates; continue to have access to debt and equity capital markets; and achieve its performance goals. The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in the Company’s Final Prospectus filed pursuant to Rule 424(b)(4) and other reports and statements that the Company has filed with the SEC. If one or more events related to these or other risks or uncertainties materialize, or if the Company’s underlying assumptions prove to be incorrect, actual results may differ materially from what its anticipates. Accordingly, you should not place undue reliance on any such forward looking statements. Any forward-looking statement speaks only as of the date on which it is made, and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Copies of the SEC filings for the Company are available for download free of charge from www.communitybanktx.com under the Investor Relations tab.

CBTX, INC. AND SUBSIDIARY Condensed Consolidated Balance Sheets (Unaudited) (In thousands)
Balance Sheet Data (at period end):		12/31/2017				9/30/2017				6/30/2017				3/31/2017				12/31/2016
Loans, excluding loans held for sale		$	2,311,544			$	2,199,478			$	2,192,443			$	2,217,656			$	2,154,885
Allowance for loan losses			(24,778	)			(23,757	)			(25,187	)			(25,881	)			(25,006	)
Loans, net			2,286,766				2,175,721				2,167,256				2,191,775				2,129,879
Cash and equivalents			326,199				348,578				307,173				272,355				382,103
Securities			223,208				217,660				220,330				219,978				205,978
Premises and equipment, net			53,607				54,129				56,609				55,986				57,514
Goodwill			80,950				80,950				80,950				80,950				80,950
Other intangible assets, net			6,770				7,031				7,298				7,513				7,791
Repossessed real estate and other assets			705				1,136				1,435				1,179				1,861
Loans held for sale			1,460				466				559				675				613
Other assets			101,418				104,167				99,267				84,137				84,833
Total Assets		$	3,081,083			$	2,989,838			$	2,940,877			$	2,914,548			$	2,951,522
Noninterest-bearing deposits		$	1,109,789			$	1,051,755			$	1,030,865			$	993,839			$	1,025,425
Interest-bearing deposits			1,493,183				1,502,872				1,485,919				1,504,606				1,515,335
Total deposits			2,602,972				2,554,627				2,516,784				2,498,445				2,540,760
Note payable			-				24,357				25,464				26,571				27,679
Repurchase agreements			1,525				2,239				2,179				2,464				2,343
Junior subordinated debt			6,726				6,726				6,726				6,726				6,726
Other liabilities			23,646				20,768				17,760				16,699				16,377
Total Liabilities			2,634,869				2,608,717				2,568,913				2,550,905				2,593,885
Shareholders' Equity			446,214				381,121				371,964				363,643				357,637
Total Liabilities and Shareholders' Equity		$	3,081,083			$	2,989,838			$	2,940,877			$	2,914,548			$	2,951,522

CBTX, INC. AND SUBSIDIARY Condensed Consolidated Statements of Income (Unaudited) (In thousands)
		For the Three Months Ended																		For the Years Ended
		12/31/2017				9/30/2017				6/30/2017				3/31/2017			12/31/2016			12/31/2017				12/31/2016
Interest Income
Interest and fees on loans		$	27,726			$	27,129			$	26,560			$	25,953		$	26,298		$	107,368			$	103,723
Securities			1,357				1,334				1,353				1,303			1,055			5,347				3,801
Federal Funds and interest-bearing deposits			1,283				1,106				813				742			658			3,944				2,427
Total Interest Income			30,366				29,569				28,726				27,998			28,011			116,659				109,951
Interest Expense
Deposits			1,993				1,964				1,857				1,838			1,914			7,652				7,073
Repurchase agreements			—				2				1				2			2			5				5
Note payable			122				269				264				251			256			906				1,061
Junior subordinated debt			86				83				79				74			72			322				266
Total Interest Expense			2,201				2,318				2,201				2,165			2,244			8,885				8,405
Net Interest Income			28,165				27,251				26,525				25,833			25,767			107,774				101,546
Provision (Recapture) for Loan Losses			1,050				(1,654	)			(694	)			960			650			(338	)			4,575
Net Interest Income After Provision (Recapture) for Loan Losses			27,115				28,905				27,219				24,873			25,117			108,112				96,971
Noninterest Income
Deposit account service charges			1,388				1,395				1,517				1,500			1,591			5,800				6,538
Net gain on sale of assets			(7	)			828				339				364			1,282			1,524				1,922
Card interchange fees			941				803				877				832			830			3,453				3,352
Earnings on bank-owned life insurance			460				459				335				326			340			1,580				1,356
Other			362				601				458				426			357			1,847				2,581
Total Noninterest Income			3,144				4,086				3,526				3,448			4,400			14,204				15,749
Noninterest Expense
Salaries and employee benefits			14,021				11,829				11,299				11,424			11,181			48,573				44,239
Net occupancy expense			2,346				2,221				2,351				2,233			2,448			9,151				10,100
Regulatory fees			487				458				621				610			606			2,176				2,300
Data processing			674				662				651				642			623			2,629				2,484
Printing, stationery and office			415				348				370				347			444			1,480				1,537
Amortization of intangibles			263				267				271				278			283			1,079				1,167
Professional and director fees			1,168				606				706				625			680			3,105				2,481
Correspondent bank and customer related transaction expenses			67				67				78				74			77			286				320
Loan processing costs			141				115				133				72			191			461				509
Advertising, marketing and business development			508				266				508				179			219			1,461				789
Repossessed real estate and other asset expense			66				340				85				118			99			609				318
Security and protection expense			300				331				352				372			363			1,355				1,718
Telephone and communications			344				311				307				354			384			1,316				1,444
Other expenses			1,189				1,196				1,127				1,099			1,040			4,611				4,096
Total Noninterest Expense			21,989				19,017				18,859				18,427			18,638			78,292				73,502
Net Income Before Income Tax Expense			8,270				13,974				11,886				9,894			10,879			44,024				39,218
Income Tax Expense			6,313				3,927				3,181				3,032			3,322			16,453				12,010
Net Income		$	1,957			$	10,047			$	8,705			$	6,862		$	7,557		$	27,571			$	27,208

CBTX, INC. AND SUBSIDIARY Financial Highlights (Unaudited) (In thousands, except per share data and percentages)
		For the Three Months Ended															For the Years Ended
		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016			12/31/2017			12/31/2016
Profitability:
Net income		$	1,957		$	10,047		$	8,705		$	6,862		$	7,557		$	27,571		$	27,208
Basic earnings per share		$	0.08		$	0.46		$	0.39		$	0.31		$	0.34		$	1.23		$	1.23
Diluted earnings per share		$	0.08		$	0.45		$	0.39		$	0.31		$	0.34		$	1.22		$	1.22
Return on average assets (1)			0.25	%		1.34	%		1.20	%		0.95	%		1.02	%		0.93	%		0.95	%
Return on average shareholders' equity (1)			1.83	%		10.54	%		9.46	%		7.73	%		8.47	%		7.18	%		7.79	%
Net interest margin- tax equivalent (1)			4.06	%		4.07	%		4.08	%		4.02	%		3.87	%		4.06	%		3.96	%
Efficiency ratio (2)			70.23	%		60.69	%		62.76	%		62.93	%		61.78	%		64.19	%		62.66	%
Liquidity and Capital Ratios:
Total shareholders' equity to total assets			14.48	%		12.75	%		12.65	%		12.48	%		12.12	%		14.48	%		12.12	%
Tangible equity to tangible assets (3)			11.98	%		10.10	%		9.95	%		9.74	%		9.39	%		11.98	%		9.39	%
Common equity tier 1 capital ratio			14.19	%		12.23	%		12.00	%		11.32	%		11.52	%		14.19	%		11.52	%
Tier 1 leverage ratio			12.30	%		10.48	%		10.39	%		10.10	%		9.78	%		12.30	%		9.78	%
Tier 1 risk-based capital ratio			14.44	%		12.49	%		12.26	%		11.58	%		11.78	%		14.44	%		11.78	%
Total risk-based capital ratio			15.42	%		13.48	%		13.33	%		12.64	%		12.85	%		15.42	%		12.85	%
Other Data:
Weighted average common shares outstanding- Basic			23,629			22,063			22,062			22,062			21,993			22,457			22,049
Weighted average common shares outstanding- Diluted			23,742			22,138			22,148			22,162			22,067			22,573			22,235
Common shares outstanding at period end			24,833			22,063			22,063			22,062			22,062			24,833			22,062
Dividends per share		$	0.05		$	0.05		$	0.05		$	0.05		$	0.05		$	0.20		$	0.20
Book value per share		$	17.97		$	17.27		$	16.86		$	16.48		$	16.21		$	17.97		$	16.21
Tangible book value per share (3)		$	14.44		$	13.29		$	12.86		$	12.47		$	12.19		$	14.44		$	12.19
Employees - full-time equivalents			462			464			472			479			479			462			479
(1)  Quarterly ratios are annualized. (2)  Efficiency ratio represents noninterest expense divided by the sum of net interest income and noninterest income. (3)  Non‑GAAP financial measure. See the table captioned “Non‑GAAP to GAAP Reconciliation.”

CBTX, INC. AND SUBSIDIARY Net Interest Margin (Unaudited) (In thousands, except percentages)
		For the Three Months Ended
		12/31/2017									9/30/2017									12/31/2016
						Interest									Interest									Interest
		Average				Earned/			Average		Average				Earned/			Average		Average				Earned/			Average
		Outstanding				Interest			Yield/		Outstanding				Interest			Yield/		Outstanding				Interest			Yield/
		Balance				Paid			Rate (1)		Balance				Paid			Rate (1)		Balance				Paid			Rate (1)
Assets
Interest-earnings assets:
Total loans (2)		$	2,252,735			$	27,726		4.88	%	$	2,191,016			$	27,129		4.91	%	$	2,179,862			$	26,298		4.80	%
Securities (available for sale and held to maturity)			222,602				1,357		2.42	%		223,132				1,334		2.37	%		192,938				1,055		2.18	%
Federal funds sold and other interest-earning assets			317,484				1,093		1.37	%		284,334				927		1.29	%		320,955				485		0.60	%
Nonmarketable equity securities			14,698				190		5.13	%		14,695				179		4.83	%		14,683				173		4.66	%
Total interest-earning assets			2,807,519			$	30,366		4.29	%		2,713,177			$	29,569		4.32	%		2,708,438			$	28,011		4.11	%
Allowance for loan losses			(24,127	)								(25,316	)								(27,357	)
Noninterest-earnings assets			296,108									290,767									278,850
Total assets		$	3,079,500								$	2,978,628								$	2,959,931
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	1,519,631			$	1,993		0.52	%	$	1,501,732			$	1,964		0.52	%	$	1,524,262			$	1,914		0.50	%
Repurchase agreements			1,793				—		—	%		2,404				2		0.33	%		2,155				2		0.18	%
Note payable			11,252				122		4.30	%		24,742				269		4.31	%		28,064				256		3.63	%
Junior subordinated debt			10,826				86		3.15	%		10,826				83		3.04	%		10,826				72		2.65	%
Total interest-bearing liabilities			1,543,502			$	2,201		0.56	%		1,539,704			$	2,318		0.60	%		1,565,307			$	2,244		0.57	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			1,087,416									1,041,731									1,015,577
Other liabilities			23,271									18,844									24,139
Total noninterest-bearing liabilities			1,110,687									1,060,575									1,039,716
Shareholders’ equity			425,311									378,349									354,908
Total liabilities and shareholders’ equity		$	3,079,500								$	2,978,628								$	2,959,931
Net interest income						$	28,165								$	27,251								$	25,767
Net interest spread (3)									3.73	%								3.73	%								3.54	%
Net interest margin (4)									3.98	%								3.98	%								3.78	%
Net interest margin—tax equivalent (5)									4.06	%								4.07	%								3.87	%
(1)  Annualized. (2)  Includes average outstanding balances of loans held for sale of $521,000, $1.0 million and $592,000 for the three months ended December 31, 2017, September 30, 2017 and December 31, 2016, respectively. (3)  Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities. (4)  Net interest margin is equal to net interest income divided by average interest‑earning assets. (5)  To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment of $549,000, $1.1 million and $605,000 for the three months ended December 31, 2017, September 30, 2017 and December 31, 2016, respectively, has been computed using a federal income tax rate of 35%.

CBTX, INC. AND SUBSIDIARY Net Interest Margin (Unaudited) (In thousands, except percentages)
		For the Years Ended December 31,
		2017										2016
						Interest										Interest
		Average				Earned/			Average			Average				Earned/			Average
		Outstanding				Interest			Yield/			Outstanding				Interest			Yield/
(Dollars in thousands)		Balance				Paid			Rate			Balance				Paid			Rate
Assets
Interest-earnings assets:
Total loans (1)		$	2,206,541			$	107,368		4.87	%		$	2,140,917			$	103,723		4.84	%
Securities (available for sale and held to maturity)			220,953				5,347		2.42	%			169,509				3,801		2.24	%
Federal funds sold and other interest-earning assets			272,715				3,204		1.17	%			301,018				1,732		0.58	%
Nonmarketable equity securities			14,692				740		5.04	%			14,683				695		4.73	%
Total interest-earning assets			2,714,901			$	116,659		4.30	%			2,626,127			$	109,951		4.19	%
Allowance for loan losses			(25,319	)									(26,826	)
Noninterest-earnings assets			284,165										276,413
Total assets		$	2,973,747									$	2,875,714
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	1,503,350			$	7,652		0.51	%		$	1,458,566			$	7,073		0.48	%
Repurchase agreements			2,254				5		0.27	%			1,918				5		0.26	%
Note payable			22,164				906		4.09	%			29,624				1,061		3.58	%
Junior subordinated debt			10,826				322		2.97	%			10,826				266		2.46	%
Total interest-bearing liabilities			1,538,594			$	8,885		0.58	%			1,500,934			$	8,405		0.56	%
Noninterest-bearing liabilities:
Noninterest-bearing deposits			1,031,707										1,010,403
Other liabilities			19,388										15,270
Total noninterest-bearing liabilities			1,051,095										1,025,673
Shareholders’ equity			384,058										349,107
Total liabilities and shareholders’ equity		$	2,973,747									$	2,875,714
Net interest income						$	107,774									$	101,546
Net interest spread (2)									3.72	%									3.63	%
Net interest margin (3)									3.97	%									3.87	%
Net interest margin—tax equivalent (4)									4.06	%									3.96	%
(1)  Includes average outstanding balances of loans held for sale of $769,000 and $905,000 for the years ended December 31, 2017 and 2016, respectively. (2)  Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities. (3)  Net interest margin is equal to net interest income divided by average interest‑earning assets. (4)  To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment of $2.3 million and $2.4 million for the years ended December 31, 2017 and 2016, respectively, has been computed using a federal income tax rate of 35%.

CBTX, INC. AND SUBSIDIARY Yield Trend (Unaudited)
		For the Three Months Ended
		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Yield Trend - Annualized:
Interest-earnings assets:
Total loans			4.88	%		4.91	%		4.83	%		4.83	%		4.80	%
Securities (available for sale and held to maturity)			2.42	%		2.37	%		2.45	%		2.43	%		2.18	%
Federal funds sold and other interest-earning assets			1.37	%		1.29	%		1.12	%		0.87	%		0.60	%
Nonmarketable equity securities			5.13	%		4.83	%		4.81	%		5.33	%		4.66	%
Total interest-earning assets			4.29	%		4.32	%		4.32	%		4.26	%		4.11	%
Interest-bearing liabilities:
Interest-bearing deposits			0.52	%		0.52	%		0.50	%		0.49	%		0.50	%
Repurchase agreements			—	%		0.33	%		0.17	%		0.33	%		0.18	%
Note payable			4.30	%		4.31	%		4.10	%		3.78	%		3.63	%
Junior subordinated debt			3.15	%		3.04	%		2.93	%		2.77	%		2.65	%
Total interest-bearing liabilities			0.56	%		0.60	%		0.58	%		0.57	%		0.57	%
Net interest spread (1)			3.73	%		3.73	%		3.74	%		3.69	%		3.54	%
Net interest margin (2)			3.98	%		3.98	%		3.99	%		3.93	%		3.78	%
Net interest margin—tax equivalent (3)			4.06	%		4.07	%		4.08	%		4.02	%		3.87	%
(1)  Net interest spread is the average yield on interest‑earning assets minus the average rate on interest‑bearing liabilities. (2)  Net interest margin is equal to net interest income divided by average interest‑earning assets. (3)  To make pre‑tax income and resultant yields on tax‑exempt investments and loans comparable to those on taxable investments and loans, a tax equivalent adjustment has been computed using a federal income tax rate of 35%.

CBTX, INC. AND SUBSIDIARY Average Outstanding Balances (Unaudited) (In thousands)
		For the Three Months Ended
		12/31/2017				9/30/2017				6/30/2017				3/31/2017				12/31/2016
Average Outstanding Balances:
Assets
Interest-earnings assets:
Total loans (1)		$	2,252,735			$	2,191,016			$	2,203,145			$	2,178,626			$	2,179,862
Securities (available for sale and held to maturity)			222,602				223,132				220,905				217,086				192,938
Federal funds sold and other interest-earning assets			317,484				284,334				228,393				257,152				320,955
Nonmarketable equity securities			14,698				14,695				14,691				14,685				14,683
Total interest-earning assets			2,807,519				2,713,177				2,667,134				2,667,549				2,708,438
Allowance for loan losses			(24,127	)			(25,316	)			(26,424	)			(25,419	)			(27,357	)
Noninterest-earnings assets			296,108				290,767				273,760				273,437				278,850
Total assets		$	3,079,500			$	2,978,628			$	2,914,470			$	2,915,567			$	2,959,931
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	1,519,631			$	1,501,732			$	1,478,579			$	1,513,348			$	1,524,262
Repurchase agreements			1,793				2,404				2,356				2,468				2,155
Note payable			11,252				24,742				25,841				26,965				28,064
Junior subordinated debt			10,826				10,826				10,826				10,826				10,826
Total interest-bearing liabilities			1,543,502				1,539,704				1,517,602				1,553,607				1,565,307
Noninterest-bearing liabilities:
Noninterest-bearing deposits			1,087,416				1,041,731				1,010,823				985,690				1,015,577
Other liabilities			23,271				18,844				16,910				16,421				24,139
Total noninterest-bearing liabilities			1,110,687				1,060,575				1,027,733				1,002,111				1,039,716
Shareholders’ equity			425,311				378,349				369,135				359,849				354,908
Total liabilities and shareholders’ equity		$	3,079,500			$	2,978,628			$	2,914,470			$	2,915,567			$	2,959,931
(1)  Includes average outstanding balances of loans held for sale.

CBTX, INC. AND SUBSIDIARY Period End Balances (Unaudited) (In thousands, except percentages)
		12/31/2017						9/30/2017						6/30/2017						3/31/2017						12/31/2016
		Amount				%		Amount				%		Amount				%		Amount				%		Amount				%
Loan Portfolio:
Commercial and industrial		$	559,363			24.1	%	$	548,870			24.9	%	$	535,116			24.4	%	$	524,201			23.6	%	$	511,554			23.7	%
Real estate:
Commercial real estate			738,293			31.9	%		689,501			31.3	%		690,044			31.4	%		723,253			32.5	%		697,794			32.3	%
Construction and development			449,211			19.4	%		424,489			19.3	%		433,966			19.8	%		522,508			23.5	%		491,626			22.8	%
1-4 family residential			258,584			11.2	%		246,564			11.2	%		240,073			10.9	%		237,218			10.7	%		236,882			11.0	%
Multi-family residential			220,305			9.5	%		211,219			9.6	%		208,222			9.5	%		124,246			5.6	%		133,210			6.2	%
Consumer			40,433			1.7	%		42,772			1.9	%		41,130			1.9	%		41,326			1.9	%		39,694			1.8	%
Agricultural			11,256			0.5	%		11,424			0.5	%		10,650			0.4	%		10,217			0.4	%		11,106			0.5	%
Other			40,344			1.7	%		29,684			1.3	%		38,237			1.7	%		39,869			1.8	%		38,180			1.7	%
Gross loans			2,317,789			100.0	%		2,204,523			100.0	%		2,197,438			100.0	%		2,222,838			100.0	%		2,160,046			100.0	%
Less deferred fees and unearned discount			(4,785	)					(4,579	)					(4,436	)					(4,507	)					(4,548	)
Less allowance for loan losses			(24,778	)					(23,757	)					(25,187	)					(25,881	)					(25,006	)
Less loans held for sale			(1,460	)					(466	)					(559	)					(675	)					(613	)
Loans, net		$	2,286,766					$	2,175,721					$	2,167,256					$	2,191,775					$	2,129,879
Deposits:
Interest-bearing demand accounts		$	363,015			14.0	%	$	340,627			13.3	%	$	343,826			13.7	%	$	355,235			14.2	%	$	359,560			14.2	%
Money market accounts			702,299			27.0	%		726,903			28.5	%		698,546			27.7	%		714,863			28.6	%		731,942			28.8	%
Savings accounts			95,842			3.7	%		88,613			3.5	%		88,083			3.5	%		88,360			3.5	%		85,927			3.4	%
Certificates and other time deposits, greater than $100,000			172,469			6.6	%		179,777			7.0	%		182,143			7.2	%		171,147			6.9	%		179,621			7.1	%
Certificates and other time deposits, less than $100,000			159,558			6.1	%		166,952			6.5	%		173,321			6.9	%		175,001			7.0	%		158,285			6.2	%
Total interest-bearing deposits			1,493,183			57.4	%		1,502,872			58.8	%		1,485,919			59.0	%		1,504,606			60.2	%		1,515,335			59.7	%
Noninterest-bearing deposits			1,109,789			42.6	%		1,051,755			41.2	%		1,030,865			41.0	%		993,839			39.8	%		1,025,425			40.3	%
Total deposits		$	2,602,972			100.0	%	$	2,554,627			100.0	%	$	2,516,784			100.0	%	$	2,498,445			100.0	%	$	2,540,760			100.0	%

CBTX, INC. AND SUBSIDIARY Credit Quality (Unaudited) (In thousands)
		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Nonaccrual loans (at period end):
Commercial and industrial		$	3,280		$	2,444		$	2,348		$	2,040		$	2,318
Real estate:
Commercial real estate			3,216			5,038			4,964			2,317			2,118
Construction and development			252			265			362			414			458
1-4 family residential			898			844			578			1,283			1,302
Multi-family residential			—			1			3			5			7
Consumer			—			—			—			—			—
Agricultural			—			—			—			6			36
Other			—			—			—			—
Total nonaccrual loans		$	7,646		$	8,592		$	8,255		$	6,065		$	6,239
Nonperforming assets (at period end):
Nonaccrual loans		$	7,646		$	8,592		$	8,255		$	6,065		$	6,239
Accruing loans 90 or more days past due			—			—			—			—			—
Total nonperforming loans			7,646			8,592			8,255			6,065			6,239
Foreclosed assets, including other real estate:
Commercial real estate, construction and development, land and land development			298			729			1,018			1,179			1,078
Residential real estate			407			407			417			—			—
Other			—			—			—			—			783
Total foreclosed assets			705			1,136			1,435			1,179			1,861
Total nonperforming assets		$	8,351		$	9,728		$	9,690		$	7,244		$	8,100
Allowance for Loan Losses (at period end):
Commercial and industrial		$	7,257		$	7,194		$	8,466		$	7,746		$	6,409
Real estate:
Commercial real estate			10,375			9,640			10,000			10,507			10,770
Construction and development			3,482			3,364			3,313			4,145			4,598
1-4 family residential			1,326			1,282			1,138			1,111			1,286
Multi-family residential			1,419			1,360			1,341			800			916
Consumer			566			626			599			615			353
Agricultural			68			69			64			63			79
Other			285			222			266			894			595
Total allowance for loan losses		$	24,778		$	23,757		$	25,187		$	25,881		$	25,006
Credit Quality Ratios (at period end):
Nonperforming assets to total assets			0.27	%		0.33	%		0.33	%		0.25	%		0.27	%
Nonperforming loans to total loans			0.33	%		0.39	%		0.38	%		0.27	%		0.29	%
Allowance for loan losses to nonperforming loans			324.06	%		276.50	%		305.11	%		426.73	%		400.80	%
Allowance for loan losses to total loans			1.07	%		1.08	%		1.15	%		1.17	%		1.16	%

CBTX, INC. AND SUBSIDIARY Allowance for Loan Losses (Unaudited) (In thousands)
		For the Three Months Ended																				For the Years Ended
		12/31/2017				9/30/2017				6/30/2017				3/31/2017				12/31/2016				12/31/2017				12/31/2016
Analysis of Allowance for Loan Losses
Allowance for loan losses at beginning of period		$	23,757			$	25,187			$	25,881			$	25,006			$	27,096			$	25,006			$	25,315
Provision (recapture) for loan losses			1,050				(1,654	)			(694	)			960				650				(338	)			4,575
Net charge-offs (recoveries)
Commercial and industrial			(52	)			(205	)			(66	)			117				2,748				(206	)			3,874
Real estate:
Commercial real estate			118				(2	)			(2	)			(3	)			(64	)			111				481
Construction and development			—				—				—				—				—				—				—
1-4 family residential			7				(2	)			(8	)			(2	)			(1	)			(5	)			(3	)
Multi-family residential			—				—				—				—				—				—				—
Consumer			(9	)			(4	)			90				(27	)			(2	)			50				232
Agricultural			(35	)			(11	)			(6	)			—				—				(52	)			241
Other			—				—				(8	)			—				59				(8	)			59
Total net charge-offs (recoveries)			29				(224	)			—				85				2,740				(110	)			4,884
Allowance for loan losses at end of period		$	24,778			$	23,757			$	25,187			$	25,881			$	25,006			$	24,778			$	25,006
Net charge-offs (recoveries) to average loans			—	%			(0.04	)%			—	%			0.02	%			0.50	%			—	%			0.23	%

CBTX, INC. AND SUBSIDIARY
Non‑GAAP to GAAP Reconciliation (Unaudited)
(In thousands, except per share data and percentages)

Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional non‑GAAP financial measures. We classify a financial measure as being a non‑GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are not included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non‑GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively financial measures calculated in accordance with GAAP. Non‑GAAP financial measures should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the way we calculate the non‑GAAP financial measures may differ from that of other companies reporting measures with similar names.

We calculate (1) tangible equity as total shareholders’ equity, less goodwill and other intangible assets, net of accumulated amortization, and (2) tangible book value per share as tangible equity divided by shares of common stock outstanding at the end of the relevant period. The most directly comparable GAAP financial measure for tangible book value per share is book value per share. We calculate tangible assets as total assets less goodwill and other intangible assets, net of accumulated amortization. The most directly comparable GAAP financial measure for tangible equity to tangible assets is total shareholders’ equity to total assets. We believe that tangible book value per share and tangible equity to tangible assets are measures that are important to many investors in the marketplace who are interested in book value per share and total shareholders’ equity to total assets, exclusive of change in intangible assets.

The following tables reconcile, as of the dates set forth below, total shareholders’ equity to tangible equity, total assets to tangible assets and presents book value per share, tangible book value per share, tangible equity to tangible assets and shareholders’ equity to total assets:

		12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016
Tangible Equity
Total shareholders’ equity		$	446,214		$	381,121		$	371,964		$	363,643		$	357,637
Adjustments:
Goodwill			80,950			80,950			80,950			80,950			80,950
Other intangibles			6,770			7,031			7,298			7,513			7,791
Tangible equity		$	358,494		$	293,140		$	283,716		$	275,180		$	268,896
Tangible Assets
Total assets		$	3,081,083		$	2,989,838		$	2,940,877		$	2,914,548		$	2,951,522
Adjustments:
Goodwill			80,950			80,950			80,950			80,950			80,950
Other intangibles			6,770			7,031			7,298			7,513			7,791
Tangible assets		$	2,993,363		$	2,901,857		$	2,852,629		$	2,826,085		$	2,862,781
Common shares outstanding			24,833			22,063			22,063			22,062			22,062
Book value per share		$	17.97		$	17.27		$	16.86		$	16.48		$	16.21
Tangible book value per share		$	14.44		$	13.29		$	12.86		$	12.47		$	12.19
Total shareholders’ equity to total assets			14.48	%		12.75	%		12.65	%		12.48	%		12.12	%
Tangible equity to tangible assets			11.98	%		10.10	%		9.95	%		9.74	%		9.39	%

Investor Relations:

James L. Sturgeon
281.325.5013
investors@CBoTX.com

Media Contact:

Ashley Warren
713.210.7622 
awarren@CBoTX.com 

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